May 21, 2025 (Baystreet.ca via COMTEX) --
- Traders wary of G-7 Finance Minster comments on currencies.
- UK inflation rises more than expected-tax hikes blamed.
- US dollar continues to slide.
USDCAD: open 1.3888, overnight range 1.3868-1.3922, close 1.3918, WTI 62.85, Gold 3313.59
The Canadian dollar extended yesterday's gain overnight due to renewed widespread US dollar selling pressures. Yesterday's rally began after Statistics Canada reported a sharp drop in inflation. April CPI rose just 1.7% compared to 2.2%, but it was the jump in the Bank of Canada's inflationary metrics that sparked the Canadian dollar rally.
The BoC CPI-trim and median rose from 2.8% and 2.9% in March, to 3.1% and 3.2% in April, respectively. Analysts quickly predicted that the BoC would leave rates unchanged at its June 6 meeting.
In addition, the lack of any substantial tariff deals combined with Trump's deficit-boost tax cuts unnerved investors, and they dumped US assets for safe-haven yen and Swiss francs.
Oil prices jumped on reports that Israel is preparing to target Iran's nuclear facilities. At the same time, Asian equity markets closed on a mixed note. Australia's ASX 200 climbed 0.52% and the Hang Seng rose 0.62%, while Japan's Topix dipped 0.22%.
In Europe, the French CAC-40 is down 0.50%, Germany's DAX has slipped 0.20%, and the UK FTSE 100 is flat. S&P 500 futures are down 0.52% as of 7:00 am ET. Gold is benefiting from the risk-off mood, rebounding from yesterday's low of 3204.71 to 3312.40. Meanwhile, the US 10-year Treasury yield has risen to 4.54% after touching 4.483% earlier this week.
EURUSD traded in a 1.1281-1.1353 band. The single currency built on Monday's rally, underpinned by speculation that Treasury Secretary Scott Bessent will push a weaker dollar message at the G-7 Finance Ministers meeting in Banff.
GBPUSD traded in a 1.3383-1.3469 range and hit the top after UK inflation rose to 3.5% y/y in April from 2.6%. The inflation gains were attributed to Chancellor Reeve's tax increases. Traders have dialed back expectations for further BoE rate cuts.
USDJPY churned in a 143.46-144.62 range. Traders bought yen on safe-haven demand and hopes of progress in tariff talks while dismissing rising Treasury yields. The currency also found support from comments by BoJ Deputy Governor Shinichi Uchida, who told lawmakers that rates could rise if inflation stays near the 2% target.
AUDUSD traded in a 0.6417-0.6459 band on general US dollar weakness, which served to offset RBA Governor Michele Bullock's dovish outlook for rates.
Canada releases New House Price data while the US calendar is empty.
COMTEX_465682545/2559/2025-05-21T14:12:40
